The Enforcement Directorate has attached 51 immovable properties worth about Rs 200.02 crore in the Andaman and Nicobar State Co‑operative Bank fraud case. The order, issued on 10 February 2026 under the Prevention of Money Laundering Act, covers hotels, resorts and multiple land parcels across the islands. This move secures a significant share of the Proceeds of Crime uncovered so far.
How the Fraud Was Carried Out
The investigation began after an FIR from the Crime and Economic Offences Police Station in the Andaman and Nicobar Islands. It named former Member of Parliament Kuldeep Rai Sharma, who also served as Vice Chairman of the bank. According to ED findings, he and his associates created 23 shell companies and used them to obtain high value loans fraudulently.
Loan Irregularities and Escalating NPAs
Loans and overdrafts totaling Rs 301.50 crore were sanctioned to 21 shell companies. Of these, loans amounting to Rs 271 crore became NPAs. Investigators observed a broader pattern in which more than 100 high value loans were sanctioned in violation of NABARD guidelines, RBI instructions and internal bank procedures. Loans above Rs 1 crore alone have contributed to more than Rs 420 crore of NPAs.
The ED found that these loans were issued without proper valuation, without evidence of real business operations and without any meaningful due diligence. Funds were diverted through related entities, withdrawn in cash and used to purchase properties in the names of associates. As a result, more than Rs 500 crore of bank loans have now turned into NPAs, with shell companies accounting for Rs 271 crore of this burden.
Properties Purchased Using Proceeds of Crime
The attached 51 properties include hotels, resorts and land parcels acquired using fraudulent loan funds. Many were obtained through powers of attorney to obscure the true purchase amounts. Investigators traced 25 such parcels valued at around Rs 123 crore. These properties were later mortgaged at inflated valuations to secure even larger loans with the cooperation of bank officials.
The assets are held in the names of the accused, their relatives, close associates and controlled firms. With this attachment, the ED has secured a major portion of assets directly linked to the fraud.
Individuals Behind the Scheme
The ED identifies Kuldeep Rai Sharma as the key mastermind. Evidence shows he influenced loan sanctioning with the help of bank officials K. Murugan and K. Kalaivanan, who have also been arrested. Both officials received part of the diverted funds. Businessmen Sanjay Lal and Sanjeev Lal supported the operation by providing dummy directors and facilitating shell entities used to obtain and siphon off loan amounts.
Arrests and Court Developments
ED has arrested Kuldeep Rai Sharma, Sanjay Lal, K. Murugan and K. Kalaivanan. A prosecution complaint was filed on 14 November 2025 against 39 accused individuals and companies. The Special Court under PMLA in Port Blair rejected their bail applications on 12 December 2025. On 10 February 2026, the Calcutta High Court, Circuit Bench at Port Blair, also dismissed the bail pleas of the main accused.
Why the Case Is Significant
This fraud illustrates how shell companies, manipulated valuations and collusion within financial institutions can cause severe losses to public funds. Loans meant for legitimate economic activity were diverted for the personal benefit of a small group. The ED’s attachment of properties marks an important step toward recovering illegally obtained assets and restoring accountability.
Next Steps in the Investigation
The ED continues tracing remaining proceeds of crime and identifying additional properties and shell entities linked to the scheme. Investigators are reviewing land transactions, loan documents and cash flows to map the full extent of the network. More attachments and legal actions are expected as the probe progresses.
Source: ED Press Release dated 13/02/2026: ANSCBL Bank Fraud Case